OT JDSU:
JDSU and CSCO are on my buy-list, because I think they will be survivors, and continue to dominate growth sectors. But, both companies have a lot of problems, with excess inventory, creative accounting, a company sized much to big for current demand, a legacy of very expensive acquisitions that haven't been fully accounted for, and valuations (still) too high. Managements (and investors) in both companies got fooled by the long economic expansion into thinking they weren't cyclicals. Also, their customer base, the telcos, are nowhere near hitting bottom. Lots of consolidation, bankrupcies, debt defaults, etc., still has to happen in the telco sector. It'll take another 24-36 months to hit bottom, IMO. And, until the telco sector hits bottom, the telco equips will see worsening fundamentals. After you put back in all the costs that are excluded from JDSU's proforma "earnings", the company lost money this fiscal year, and probably will next year as well. After the inventory glut gets worked out, then we'll see a price war. So, I'll probably not be taking LT positions in either of them until 2002, or maybe even 2003. |
